Telstra takes asbestos scandal on the chin – for now

Chief executive David Thodey said Telstra does not believe it has any material liability that would need to be disclosed to the ASX at this time related to NBN asbestos exposure.
Photo Luis Enrique Ascui

by
John McDuling

Telstra
shares sank to seven-week lows as the company moved to downplay concerns an escalating asbestos scandal could leave it exposed to a wave of damaging lawsuits.

The telco giant on Monday said it did not believe it faced any material financial risks from potential lawsuits due to mishandling as asbestos fibres were removed from its pits and pipes as part of the construction of the national broadband network (NBN).

Despite the reassurance, Telstra’s shares fell to their lowest level since April 15 on Monday, hitting an intraday low of $4.60 before stabilising to close 8¢, or 1.7 per cent, lower at $4.66.

“Telstra has processes for managing claims of any type from employees and the public to ensure that such claims are handled sensitively and expeditiously," Mr Thodey said.

“Should we form the view that there is a material financial risk to the company or any other material information that is required to be disclosed to the ASX under the listing rules, we will take immediate action to notify the market. We do not believe this to be the case at this time."

Under Telstra’s multibillion-dollar agreement with the federal government, the company is responsible for repairs to its ageing infrastructure, known as “remediation", before new NBN fibre-optic lines are installed. This includes the removal of asbestos from thousands of pits and ducts around the country.

Residents in Penrith in Sydney’s outer west and in Ballarat in Victoria last week complained about asbestos being mishandled, potentially exposing families to life threatening risks.

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Mr Thodey met federal Workplace Relations Minister
Bill Shorten
, Communications Minister
Stephen Conroy
, representatives from NBN Co and unions at Parliament House in Canberra on Monday following the reports and calls from the government for it to establish a compensation fund for any victims.

After the meeting, Mr Thodey said Telstra took full responsibility for potential asbestos exposure, but could not guarantee that individuals would not be exposed to the materials during the NBN rollout in coming years.

“I can’t guarantee it on asbestos because asbestos is in this building, in the air," he said. “We will do everything we can and follow every process we know. But ‘guarantee’ is a very strong word."

BT Investment Management analyst
Sondal Bensan
said he did not think Telstra would face material financial liabilities and that the situation appeared manageable.

“You can never budget for claims and it’s hard to know what the liabilities could be," he said. “It depends on how much exposure there has been and whether or not people have been affected by it. Given the scope of work to date, it should be minimal. Let’s hope it is for all involved."

Mr Thodey has rejected calls for Telstra to set up a compensation fund for asbestos victims, saying it is better nandled on a case-by-case basis.

Bolstered by its lucrative NBN agreements, Telstra expects to generate an excess free cash pile of up to $3 billion by mid-2015.